IRS notices can feel overwhelming, but they don’t have to be. These official letters from the Internal Revenue Service (IRS) inform you about your tax account—whether it’s a balance due, a request for information, or a change to your tax return. This guide demystifies common IRS notices, helping you understand what they mean, how to respond, and when to seek expert help. By taking the right steps, you can resolve issues quickly and avoid penalties or escalation.

IRS notices are official communications sent to taxpayers about their tax accounts. They might notify you of:

• A balance due (unpaid taxes, penalties, or interest)

• Underreported income or discrepancies in your tax return

• An upcoming audit or request for documentation

• Penalties or adjustments to your account

• A warning before seizing assets

Each notice includes details about the issue, instructions for responding, and a deadline. Ignoring a notice or missing a deadline can lead to penalties, interest, or serious actions like wage garnishment or property liens. Understanding and addressing these notices promptly is key to staying in control of your tax situation.

CP14: Balance Due Notice

• What it is: The CP14 is the first notice you’ll receive if you owe taxes, penalties, or interest after filing your return. It’s a bill for the unpaid amount.

• What it means: You have a tax debt that needs to be paid or addressed.

• How to respond:

  • If you agree: Pay the full amount by the due date (usually 21 days from the notice date) via IRS.gov/payments or by mail with the included voucher.

  • If you can’t pay in full: Apply for an installment agreement at IRS.gov/OPA.

  • If you disagree: Call the IRS at the number on the notice and provide evidence (e.g., proof of payment) to dispute it.

• Deadline: Typically 21 days. Check the notice for the exact date. Non-payment can lead to further notices and collection actions.

CP2000: Notice of Underreported Income

• What it is: A CP2000 notice is sent when the income you reported on your tax return doesn’t match data from employers, banks, or other payers (e.g., W-2s, 1099s). It proposes changes to your return.

• What it means: The IRS believes you underreported income, which may increase your tax liability or, in rare cases, result in a refund.

• How to respond:

  • Review the notice and your records (e.g., tax forms, pay stubs).

  • If you agree: Sign and return the response form with payment (if owed) within 30 days.

  • If you disagree: Submit a written explanation and supporting documents (e.g., corrected forms) to challenge the changes.

  • Need more time? Call the IRS to request an extension.

• Deadline: 30 days from the notice date. Ignoring it may lead to a final assessment, penalties, and interest.

CP501: Balance Due Reminder

• What it is: The CP501 is a follow-up notice if you didn’t pay the amount owed after a CP14 or similar notice. It’s a reminder of your unpaid balance.

• What it means: You still owe money, and the IRS is escalating its efforts to collect.

• How to respond:

  • Pay the full amount by the due date (usually 10 days) to avoid further action.

  • If you can’t pay, set up a payment plan or explore an Offer in Compromise via IRS.gov.

  • If you’ve already paid or disagree, contact the IRS with proof (e.g., bank statements).

• Deadline: Typically 10 days. Unresolved balances may lead to liens or levies.

CP90: Intent to Levy

• What it is: The CP90 notice, also known as a “Final Notice of Intent to Levy and Notice of Your Right to a Hearing,” is a serious warning that the IRS plans to seize your assets (e.g., bank accounts, wages, or property) to collect an unpaid tax debt. It’s typically sent after previous notices like CP14 or CP501 have gone unresolved.

• What it means: The IRS is preparing to take enforcement action due to your unpaid balance. You have a final chance to resolve the debt or request a hearing before the levy occurs.

• How to respond:

  • Pay in full: Settle the full amount by the due date to stop the levy process. Pay online at IRS.gov/payments or by mail using the payment voucher included with the notice.

  • Set up a payment plan: If you can’t pay in full, apply for an installment agreement at IRS.gov/OPA to spread payments over time.

  • Request a Collection Due Process (CDP) hearing: You have the right to a hearing to appeal the levy. Submit Form 12153 (Request for a Collection Due Process or Equivalent Hearing) within 30 days to discuss alternatives like an Offer in Compromise or Currently Not Collectible status.

  • Dispute the debt: If you believe the amount is incorrect, contact the IRS with proof of payment or other evidence to challenge the balance.

• Deadline: You have 30 days from the notice date to respond or request a hearing. If you miss this deadline, the IRS may proceed with the levy, seizing funds or assets to cover your debt.

Letter 566: Audit Initial Contact

• What it is: Letter 566 begins an IRS audit, requesting information or documents to verify items on your tax return.

• What it means: The IRS is examining your return for accuracy. This could be a correspondence audit (by mail) or an in-person review.

• How to respond:

  • Collect the requested records (e.g., receipts, logs) and send them by the deadline.

  • Request an extension if needed by contacting the IRS.

  • For complex audits, consider hiring a tax professional to represent you.

• Deadline: Varies by notice—check the letter. Missing it could lead to disallowed deductions or additional taxes.

These practical steps apply to any IRS notice you receive:

• Don’t ignore the notice: Even if it’s confusing, take action to avoid escalation.

• Read it carefully: Look for the notice number, issue details, and deadline.

• Check for errors in the IRS calculation: Compare the notice to your records—mistakes happen.

• Respond by the deadline: Contact the IRS if you need more time or clarification.

• Keep copies: Save the notice and all correspondence for your records.

• Get help if it’s complicated: A tax professional can prevent costly missteps in tricky cases.

Dealing with an IRS notice can be stressful, especially if, like most IRS notices, it’s complex or unclear—like a CP90 threatening a levy. Don’t risk penalties or escalation by guessing your next step. Schedule a free consultation to connect with an expert who can guide you through the process and resolve your tax issues with confidence.